Chapter V
PARTNERSHIPS
Article 130.- Partnerships
1. A partnership is an enterprise in which:
a/ There are at least two partners who are co-owners of the company, jointly conduct business under one common name (hereinafter referred to as partners); in addition to general partners, there may also be limited partners;
b/ General partners to a partnership must be individuals who are liable for all obligations of the partnership with his/her own entire property;
c/ Limited partners shall be liable for debts of the partnership only to the extent of their capital contribution to the partnership.
2. A partnership shall have the legal person status from the date of receipt of the business registration certificate.
3. A partnership must not issue any type of securities.
Article 131.- Capital contribution and grant of capital share certificates
1. General partners and limited partners shall have to make capital contribution in full and on time as committed.
2. If a general partner fails to contribute capital in full and on time as committed, thereby causing losses to the company, such partner shall have to compensate the company for such losses.
3. If a limited partner fails to contribute capital in full and on time as committed, the deficit amount shall be regarded as a debt of such partner to the company; in this case, such limited partner may be expelled from the company as decided by the Partners' Council.
4. At the time of making full capital contribution as committed, partners shall be granted a capital share certificate. A capital share certificate shall have the following principal contents:
a/ Name, address of the head office of the partnership;
b/ Number and date of grant of the business registration certificate;
c/ Charter capital of the partnership;
d/ Name, permanent address, nationality, number of the people's identity card, passport or other legal personal certification of the partner and type of partner;
e/ Value of contributed capital amount and type of assets used as contributed capital of partners;
f/ Number and date of grant of the capital share certificate;
g/ Rights and obligations of the owner of the capital share certificate;
h/ Full name and signature of the owner of the certificate of capital contribution and of all general partners of the partnership.
5. If the capital share certificate is lost, torn, burnt or otherwise destroyed, partners shall be granted a new one by the partnership.
Article 132.- Assets of a partnership
1. Assets used as capital contributions by partners, the ownership of which has been
transferred to the partnership.
2. Assets created under the partnership's name.
3. Assets acquired from any business operations performed by general partners on behalf of the partnership or from any business operations within the registered business lines of the partnership which are conducted by general partners on their own behalf.
4. Other assets as provided for by law.
Article 133.- Restrictions on rights of general partners
1. General partners cannot be owner of a private enterprise or general partners of other partnerships Unless it is so agreed by the remaining general partners.
2. General partners cannot conduct the same business lines of the partnership whether on their behalf or others' behalf for their own benefits or benefits of other organizations or individuals.
3. Without approval from the remaining general partners, general partners cannot transfer part or the whole of their capital contribution in the partnership to others.
Article 134.- Rights and obligations of general partners
1. General partners shall have the following rights:
a/ To participate in meetings, discuss and vote all issues in the partnership; each general partner has one vote unless otherwise provided for in the partnership's charter;
b/ On behalf of the partnership, to conduct business operations within the registered business lines of the partnership; negotiate and enter into contracts, agreements or accords with terms deemed to be the most beneficial to the partnership;
c/ To use the partnership's seal and property to conduct business operations within the registered business lines of the partnership; if money is advanced by a partner to conduct the partnership's business, he/she can request the partnership to return the principal of the advanced money and its interest calculated at the market interest rate;
d/ To request the partnership to cover losses from conducting business operations within its powers if such losses were incurred not due to partners' mistakes;
e/ To request the partnership or any other general partners to provide information on the partnership's business operations; inventory assets, check accounting books and other documents of the partnership at any time if necessary;
f/ To receive profit sharing pro rata with the proportion of the capital contribution or as agreed in the partnership's charter;
g/ To receive a portion of the remaining assets pro rata with the proportion of the capital contribution, unless another ratio is provided for in the partnership's charter when the partnership dissolves or goes bankrupt;
h/ If a general partner is dead or declared dead by the court, his/her heir shall enjoy the portion of asset which the deceased partner shall be entitled to receive after his/her debt to the partnership has been paid. The heir may become a general partner if it is so approved by the Partners' Council.
i/ Other rights as provided for by this Law and the partnership's charter.
2. General partners shall have the following obligations:
a/ To manage and carry out business operations in an honest, careful and optimal manner to ensure the maximum lawful benefits of the partnership and all partners;
b/ To manage and supervise business operations of the partnership in accordance with the provisions of law, the partnership's charter and decisions of the Partners' Council; if violating the provisions of this Point, causing losses to the partnership, to be responsible for compensating the partnership for such losses;
c/ Not to use the partnership's assets for their own benefits or benefits of other organizations or individuals;
d/ If a general partner receives money or property by using the partnership's name or on his/ her behalf or another person's behalf or receives money or property from business activities within the partnership's registered business lines and does not return to the partnership, he/she shall have to return the money or property received;
e/ To be jointly responsible for paying off all remaining debts of the partnership if the property of the partnership is not enough for paying off all the partnership's debts;
f/ If the partnership makes business losses, to incur losses pro rata to their capital contribution to the partnership as agreed upon in the partnership's charter;
g/ To make monthly truthful and accurate reports to the partnership on their business progress and results and provide information on their business progress and results to partners who have a request;
h/ Other obligations as provided for by this Law and the partnership's charter.
Article 135.- Partners' Council
1. All partners shall form the Partners' Council. The Partners' Council shall elect one general partner to be its chairman who shall concurrently be the director or general director, unless otherwise provided in the partnership's charter.
2. All general partners shall be entitled to convene meetings of the Partners' Council to discuss and decide on business activities of the partnership. Partners who convene a meeting must prepare the content, agenda and materials for the meeting.
3. The Partners' Council shall be entitled to decide on all business issues of the partnership. Unless otherwise provided for in the partnership's charter, decisions on the following issues shall be approved by at least three-quarters of the total number of general partners:
a/ The partnership's development orientations;
b/ Amendments and supplements to the partnership's charter;
c/ Admission of new general partners;
d/ Acceptance of the withdrawal of general partners from the partnership and decision on the exclusion of members from the partnership;
e/ Decision on investment projects;
f/ Decision on borrowing and mobilization of capital in other forms, lending capital with a value equal to or higher than 50% of the partnership's charter capital, unless otherwise provided for in the partnership's charter;
g/ Decision on purchase, sale of assets valued at equal to or higher than the partnership's charter capital, unless otherwise provided for in the partnership's charter;
h/ Decision on approval of annual financial statements and total profits allowed to be divided and profits divided to each partner;
i/ Decision on the partnership's dissolution.
4. Decisions on issues not specified in Clause 3 of this Article shall be approved if they are accepted by at least two-thirds of general partners; a specific ratio shall be provided for in the partnership's charter.
5. The right of limited members to vote shall be provided for in the partnership's charter.
Article 136.- Convention of meetings of the Partners' Council
1. The chairman of the Partners' Council may convene a meeting of the Partners' Council at any time if necessary or at the request of general partners. If the chairman fails to convene a meeting at the request of general partners, the requesting partners shall convene the meeting.
2. Invitation to a meeting may be in writing, by telephone, fax, telex or other electronic equipment. An invitation must specify the purpose, requirements, content, agenda and venue of the meeting and the name of the partner requesting convention of the meeting.
Documents used for deciding on issues as provided for in Clause 3, Article 135 of this Law should be sent in advance to all partners. The time limit for sending such documents shall be specified in the partnership's charter.
3. The chairman of the Partners' Council or partners who request convention of the meeting shall chair the meeting. All meetings of the Partners' Council shall be recorded in the minutes book of the partnership. A minutes must have the following principal contents:
a/ Name, address of the head office of the partnership, number and date of grant of the business registration certificate, place of business registration;
b/ Purpose, content and agenda of the meeting;
c/ Time and place of the meeting;
d/ Full names of the chair and participating partners;
e/ Opinions expressed by participating partners;
f/ Adopted decisions, number of partners who approve and the principal contents of such decisions;
g/ Full names and signatures of all participating partners.
Article 137.- Business management of a partnership
1. All general partners shall have the right to be representatives-at-law and manage and conduct daily business activities of the partnership. Any restriction on general partners in conducting daily business activities of the partnership shall only have effect to a third party if this party is informed of such restriction.
2. In managing the partnership's business operations, general partners shall divide duties for managing and supervising the partnership.
When some or all general partners jointly conduct several business activities, decisions shall be made on the principle of majority.
Any activity which is conducted by any general partner outside business operations within the scope of the partnership's registered business lines shall not fall within the responsibilities of the partnership unless such operations are accepted by the remaining partners.
3. The partnership may open one or several bank accounts. The Partners' Council shall authorize one partner to deposit and withdraw money from these accounts.
4. The chairman of the Partners' Council, the director or general director shall have the following duties:
a/ To manage and direct day-to-day business operations of the partnership as a general partner;
b/ To convene and conduct meetings of the Partners' Council; sign decisions or resolutions of the Partners' Council;
c/ To assign and coordinate business operations among general partners; sign decisions on regulations, rules and other internal organizational issues of the partnership;
d/ To arrange, keep complete and truthful accounting books, invoices and vouchers and other documents of the partnership according to the provisions of law;
e/ To represent the partnership in relations with state agencies; represent the partnership as a plaintiff or a defendant in lawsuits or commercial or other disputes;
f/ Other duties as provided for in the partnership's charter.
Article 138.- Termination of general partner status
1. A general partner status shall be terminated in one of the following cases:
a/ Voluntary capital withdrawal from the partnership;
b/ He/she is dead or declared dead by the court;
c/ He/she is declared missing by the court or his/her civil act capacity is restricted or lost;
d/ He/she is expelled from the partnership;
e/ Other cases as provided for in the partnership's charter.
2. General partners may withdraw capital from the partnership if approved by the Partners' Council. In this case, partners who want to withdraw capital from the partnership shall notify in writing the capital withdrawal request at least six months before the date of capital withdrawal. Capital shall only be allowed to be withdrawn at the end of a fiscal year and the financial statement of such fiscal year has been approved.
3. General partners shall be expelled from the partnership in the following cases:
a/ They are unable to contribute capital or fail to contribute capital as committed after the partnership has sent the second notification;
b/ They violate the provisions of Article 133 of this Law;
c/ They fail to conduct business activities in an honest and careful manner, or have inappropriate behaviors causing serious losses to the partnership's and others partners' benefits;
d/ They fail to perform properly obligations of general partners.
4. In case of termination of the partner status of a partner whose civil act capacity is restricted or lost; the capital contribution of such partner shall be returned fairly and properly.
5. Within two years as from the date of terminating the general partner status as provided for at Point a and Point d, Clause 1 of this Article, such partners shall still be jointly responsible for the partnership's debts by their entire property which arose before such date.
6. After the termination of the general partner status, if the name of such partner has been used as part or the whole of the name of the partnership, such partner may request the partnership to stop that use.
Article 139.- Admission of new partners
1. A partnership may admit new general or limited partners; admission of new partners of a partnership shall be subject to approval of the Partners' Council.
2. A new general partner or limited partner shall make full capital contribution to the partnership within fifteen days from the date of admission, unless another time limit is decided by the Partners' Council.
3. New general partners shall jointly be responsible for all debts and other property liabilities of the partnership with their entire property, unless otherwise agreed between such new partners and the other partners.
Article 140.- Rights and obligations of limited partners
1. Limited partners shall have the following rights:
a/ To participate in meetings, discuss and vote in the Partners' Council on amendments and supplements to the partnership's charter, amendments and supplements to rights and obligations of limited partners, re-organization and dissolution of the partnership, and other contents of the partnership's charter that are directly related to their rights and obligations;
b/ To receive annual profits sharing pro rata the proportion of capital contribution in the partnership's charter capital;
c/ To be provided with annual financial statements of the partnership; request the chairman of the Partners' Council, general partners to provide fully and truthfully information on the business operations and results of the partnership; review accounting books, minutes book, contracts, transaction documents, files and other documents of the partnership;
d/ To transfer their capital contributions in the partnership to others;
e/To conduct the same registered business lines of the partnership on their behalf or others' behalf;
f/ To dispose of their capital contribution by bequeathing, giving, presenting, mortgaging, pledging and other activities as provided for by law and the partnership's charter; if a partner is dead or declared dead by the court, the heir replacing the deceased partner shall become the limited partner of the partnership;
g/ To receive part of the remaining assets pro rata to the proportion of capital contribution in the partnership's charter capital when the partnership is dissolved or goes bankrupt;
h/ Other rights as provided for by this Law and the partnership's charter.
2. Limited partners shall have the following obligations:
a/ To be responsible for all debts and other property liabilities of the partnership within their committed capital contribution proportions;
b/ Not to manage the partnership or conduct business activities on behalf of the partnership;
c/ To comply with the partnership's charter and rules and decisions of the Partners' Council;
d/ Other obligations as provided for by this Law and the partnership's charter.
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